How to Figure out Rent Rates

OK: The golden question: "How much do I charge?"

The simplest way to tell is if you have a very similar unit to something you have a comparative value for. Condos and townhomes are easiest in this respect. Houses are a little different, because you can't always just charge by the room, as there are people out there renting whole houses at fixed rates.

Finding comparisons is easy: go to www.househunting.ca and check the local listings in the area. Househunting.ca is a national ammalgamation of all newspaper and online listings and is a fantastic resource for any peoperty baron(ette).

Obviously, you need to figure out how much you need to cover your costs, which should be projected before you even buy the place! Essentially, factor in:

Mortgage

Taxes

Utilities (if any - often tenants pay)

Condo Fees (if in condo)

Insurance (if you own a condo, it is usually already covered, but check the policy!)

20% of rent for repairs and possible vacancies.

Make sure that these will be covered by your projected rent. If a unit is in excellent shape or is in an area that rents well, or there is a noted shortage of them in the community. For example, in Ottawa there is a shortage of Single family townhomes for rent. Therefore, I buy them and rent them at a premium. Finding a discrepancy between sale demand and rental demand is great! Seems there are tons of these townhomes on the market and they turnover quickly,  but they also happen to be 95% owner occupied because they make great starter homes. Renters desire them too, but often cannot buy them. I am therefore making money by absorbing the risk associated with owning the townhome and providing that service to tenants. That's my competitive advantage: access to capital and knowledge of the system.

There are certain time of the year when it is best to rent a unit. Typically it's May and September, as the demand for rental units is enormous, often outstripping supply. This is because many people in the academic and government sectors will shift around in may, before the summer, and most private sector individuals or people will children in school will move for September. I have had nothing but good luck renting for may and sept, and generally had headaches trying for midwinter.

Ensure that your property is in good shape for when prospective tenants come to see it. Making it look as neutral and open as possible will help. A fresh coat of paint, a fantastic cleaning, and some fabreeze will make them that much more willing to sign. For determining rent based on 'niceness' or the quality of the interior, you can charge a premium if the place is indeed quite nice. Conversely, you will need to lower it a bit if it's in poor condition.

There is a certain unique advantage to pricing your unit high and making it a little nicer than others: You don't have to deal with questionable tenants. Harsh but true! A few quick rules for pricing:

1. Always make the unit nicer inside than the competition

2. Always start at the higher end of the price scale, work backwards if you need to.

3. Write the most descriptive rental ad you can. Include a picture online

4. Don't use newspapers; too expensive, readership is declining, and there are plenty of reputable online sites and even free ones like kijiji and craigslist.

5. Never haggle over rents. Your price is your price.

6. ALWAYS sign a lease, typically for at least a year

7. Always collect first and last month's rent, no exceptions.

8. You actually need a license to rent by the room - so you must rent the whole unit to a group of people, not one by one.

I will post more on dealing with tenants later,

AIML.